Retailers are trying to get back to black...literally

In July 1980, six months following the unexpected death of lead singer, Bon Scott, AC/DC released their seventh album, Back in Black. The Australian hard rock band nearly disbanded after Scott's death, but rallied around new lead singer, Brian Johnson, to produce what would become the best-selling hard rock album of all-time. The album's all-black cover was a "sign of mourning" for Scott, according to lead guitarist, Angus Young. Back in Black contains many of AC/DC's biggest hits, including "Hells Bells," "You Shook Me All Night Long" and the album's title track. These classic tunes helped immortalize the band which was inducted into the Rock and Roll Hall of Fame in 2003. Far from top-selling and immortal, recent trends among apparel retailers have been a complete bust. The back-to-school shopping season was among the worst we've witnessed in our twenty years in the business. Countless companies across the specialty apparel and department store sectors announced utterly dismal sales results and downward revisions to earnings. Teen retailers Abercrombie, American Eagle, Aeropostale, and Rue 21 were particularly hard hit by traffic declines and announced substantial downward revisions to EPS guidance. Problems at Rue 21 nearly derailed a private equity takeout bid announced in May (that probably should have been derailed). However, the sudden sales falloff wasn't just contained to the teen players. Department store companies Kohl's, Target and Nordstrom had to lower their respective sales forecasts as well. Seemingly every day, another retail company with exposure to apparel lowered guidance. Given further deterioration in traffic trends, gross margin compression is likely in the second half of this fiscal year. Factoring in the short shopping window for the holidays this year (one less week between Thanksgiving and Christmas), retailers with exposure to apparel could be in trouble and experience downward earnings revisions. Brian Johnson's raspy lead vocal on the rock ballad, "Hell's Bells," may be more appropriate background music over Bing Crosby's "Jingle Bells" while walking the malls this holiday season.